The amount you can borrow for your home purchase is calculated by using your DTI (debt to income) Ratio. In a perfect world you want to spend no more than 36% of your gross income on your house and other debt payments. However, we don't live in a perfect world so there are many loan programs that will allow you to spend a higher percentage by considering other factors like employment history, credit history, reserves (the cash you have left after the closing) and the amount of your down payment. The easiest thing to do is give us a call, in just a few minutes we can help determine exactly how much you can afford....and maybe more importantly how much you are comfortable spending.
**Special Note: generally daily living expenses like car insurance, cell phone, utility ,food bills are not used in the "other debts" calculation.
Consult a Professional - As part of the application process the questions we ask help us to discover the details of your personal and financial picture. This will allow us to structure several mortgage options that best suit your individual circumstances. There is no correct "Plain Vanilla" answer and there really shouldn't be since you are an individual and not plain at all!
No matter what, you will always need to spend some money when you are buying a home. How much exactly?.....well that will require a deeper discussion. In general, the amount of cash you will need depends on a number of items.
Generally speaking, you will need to provide money from your own pocket for the below list of items:
It's fair to say that during the home buying process you will need a minimum of about $2,000 of available cash. Some or most of this could be retuned to you if properly structured financing can be approved.
For most homeowners, the monthly mortgage payments include three separate parts:
That is a crazy question and you won't believe me but the answer is ZERO (0). Don't get too excited, allow me to explain. Getting a mortgage is a lot like walking around a maze but instead of only one exit there are many. Sadly though, only certain doors will open based on your specific qualifications. Most people commonly think of FHA or Fannie Mae when they think of a mortgage but there are many other types. Each one offering a different solution.
There are four main parts to a mortgage qualification:
The general idea is if one of these is not perfect, that's OK but if two or more is not perfect that will make getting a mortgage much harder.
The best thing to do is have a conversation with a Professional (that's us!) and if you don't like what you hear, always get a second opinion!
Each lender may apply what are called Overlays. These are additional or adjusted rules that are specific to that lender. They do this because that particular company wants to limit risk or has a particular interest in a specific type of loan. This is why a second opinion is always worth the time invested.
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